Covid-19: Government Reduces Financial Assistance For Businesses
Businesses need to get to grips with all the changes in the government’s financial support measures introduced since March, as it becomes more streamlined and targeted.
CJRS
The coronavirus job retention scheme (CJRS) has been the bedrock for emergency financial support for businesses from March 2020 when the country went into a full lockdown. Eligible in relation to employees who had received payment on or after 1 March this year, and who were paid through PAYE, could be furloughed (for at least three weeks) and government would foot the majority of the wage bill.
Specifically, until the end of August 2020 government paid 80% of the employee’s wages capped at £2,500 (employers could top this up if they wished). From September, the government has reduced the level of its financial support, paying up to 70% of wages with the employer contributing 10%; and again in October, dropping to 60% of wages with the employer contributing 20%.
The CJRS ends on 31 October to be immediately replaced with the job support scheme (JSS).
JSS
From 1 November, targeted financial support under the JSS commences. Perhaps considered to be a streamlined and less generous version of the CJRS, it recognises that not every business can survive the long-term financial impact of the pandemic, even with the emergency help already afforded.
The new JSS is intended to protect ‘viable jobs’ at businesses facing lower demand over winter because of covid-19 and is set to last until 30 April 2021 (subject to further extensions). But note that large businesses will have to meet a financial assessment test. Employers who use the JSS will also be able to claim the job retention bonus if they are eligible.
Employees with a ‘viable’ job must have been on the payroll on or before 23 September 2020 and they must also work for a minimum of one third of their normal hours to be eligible. However, there must be an agreement between employer and employee as to the new short-term working arrangements; make necessary changes to the employment contract by agreement; and give written notification to the employee.
The business must pay its employee for time worked, but the cost of hours not worked will then be split between the employer, the government (through wage support) and the employee (through a wage reduction), and the employee gets to keep their job.
Specifically, the government will pay a third of hours not worked (up to a cap, with the employer also contributing a third. This will ensure employees earn at least 77% of their normal wages, where the government contribution has not been capped.
Earlier this month, government also confirmed that the JSS will help businesses who are legally required to close their premises under covid-19 restrictions. Under this JSS ‘expansion’ two thirds of employees’ salaries will be paid (again, subject to a cap).
Finally, businesses need to note that the minimum threshold of the hours worked could be reviewed and increased after three months.
There remain a number of unknowns, not least what is meant by a ‘viable job’ but detailed government guidance is expected to be set out imminently.
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